Introduction
Perhaps everything began to change around 1995, perhaps not. I was new to health law teaching then, and it is always tempting to tell stories that begin in one’s youth. There were certainly giants in the field back then — “giants” are probably easiest to notice when they are already full-grown — but something in U.S. health policy has seemed different since the mid-1990s.Footnote 1 The difference centers on the role of money in medicine. Put simply, so much money has come into modern American medicine that change is harder rather than easier. Investment in our collective future — the point of spending tax dollars on health, as it is also of spending on education —suffers because we keep paying too much for the present.
Let’s start with the numbers. A good way to understand one’s colleagues in health law and policy is to ask them the first dollar figure they remember describing annual U.S. health care spending. For me, the number was $200 billion (equal to about three times that in current dollars), learned in a medical school health policy class in the early 1980s.Footnote 2 (In terms of general inflation, something costing a dollar in 1960 would cost about $10 today).
Medicare’s (and Medicaid’s) passage in 1965 at the peak of enthusiasm for building a “Great Society” was the fiscal watershed for health care investment.Footnote 3 In 1960, annual expenditures were $26.9 billion, with the governmental contribution only $6.6 billion.Footnote 4 A mere ten years later, those figures had grown to $74.7 and $27.3 billion.Footnote 5
In 2024, the United States is projected to have spent just over $5,000,000,000,000 on medical care, roughly $15,000 per person (though much less on healthy people and much, much more on those with serious illnesses, injuries, or disabilities).Footnote 6 Even with higher general growth in the U.S. economy compared to other developed countries, a twenty-four percent difference in percent of GDP spent on health in 1980 became a fifty-two percent difference by 2023.Footnote 7
An aside: lest this essay seem too self-indulgent of recent history and, by extension, one’s own place in it, concerns about high cost and limited accessibility of medical care long predate Medicare. American medicine has always seemed too expensive (though most so in periods of general economic uncertainty), with its cost trajectory a perpetual crisis that is now so baked into health policy that perhaps it is not a crisis at all. In the late 1920s, for example, a physician-led Committee on the Costs of Medical Care convened, deliberated, and opined on rising medical care costs – one of many blue-ribbon bodies to assume and discharge such responsibility in the last century.Footnote 8
Recent warnings about the apparent dangers to patients, physicians, and care relationships from the “financialization” of health care, such as private equity “roll-up” acquisitions of medical practices and other health care businesses,Footnote 9 therefore continue a pattern. Prior cycles of post-Medicare professional outrage and defensiveness followed by partial capitulation and incorporation into the prevailing business model occurred in the 1970s (for-profit hospitals), 1980s (home health care, physician self-referral enterprises), 1990s (network HMOs, physician practice management companies), 2000s (hospital consolidation, Pharmacy Benefit Managers, retail medical clinics), and 2010s (Accountable Care Organizations, pharmaceutical-physician financial relationships).
My point is not that ethical professionalism has prevailed, though it manages to survive on the skill and dedication of nurses, physicians, and other health care workers. Rather, my point is that the U.S. health care system is no less ethical today than it has been in the past. One should not criticize the morality of change without interrogating the morality of the status quo.
In the 1990s, Jerome Kassirer wrote that “a system in which there is no equity is, in fact, already unethical.”Footnote 10 The same can be said for a system that overfunds medical care and underfunds other essential social investments, including education. A system that, moreover, cannot be justified by the limited morality of competition in the marketplace because it does not — and could not absent radical change — perform as a functioning market would. In terms of robust market competition with its winners and losers, U.S. health care has been, at worst, a sheep in wolf’s clothing.
This essay explores central aspects of the relationship between money and national health policy over the past sixty years, from the passage of Medicare in 1965 to the present, with an extended discussion of the two most sweeping attempts at system reinvention during that period – one earning passage into law (the Patient Protection and Affordable Care Act of 2010, or ACA), the other not (the failed Health Security Act of the early 1990s).Footnote 11 It focuses on the big picture, as an entire library could be devoted to the details of a high-technology but also labor-intensive sector that constitutes over one-sixth of the U.S. economy.Footnote 12
Looking back from 2025, the ACA’s passage presaged (I hesitate to say caused) a backsliding from commitments to better clinical performance, better population health, and greater social solidarity that it should have inspired the nation to pursue. This retreat seems to be accelerating under the second Trump administration, in which many longstanding assumptions about America’s commitments to the nation’s welfare and to global stability have been challenged or upended.
Most of the new policies, implemented mainly through executive-branch actions but also present in early Republican legislative proposals, seem primarily about money for science, education, health, global humanitarian relief, and domestic welfare. The Medicaid program, which was passed as a companion law to Medicare in 1965 to fund health insurance for poor Americans while Medicare supports older Americans, appears to be under more severe political threat now than at any time since its enactment. Even the Social Security system, which since the 1930s has provided income in retirement to Americans who contribute to it during their working years, is being questioned.
This essay is not primarily about the new Trump administration or its potential effects on American health care. Nobody knows what will happen in the next year, or in the next few years. Those of us who are experts in U.S. health policy anticipated that there would be fierce debate over many of the issues that the Trump administration has prioritized, but none of us expected so many decisions to be made so quickly outside the usual channels of law, Congress, and the courts.
I. Reasonable Expectations Unmet
Still, in hindsight at least, the mid-1990s represent an inflection point. Things that were reasonable to predict at the time did not come to pass, such as lower-cost industrialization of medical production, meaningful control by individuals over their own health-related needs and experiences, or reasoned engagement by the citizenry with society-wide health care rights and responsibilities. Failure to achieve these objectives also precluded serious consideration of the opportunity costs, both public and private, consequent to unconstrained medical spending. There has been minimal discussion, for example, of the tradeoffs involved in choosing to spend public dollars on health rather than, say, education or infrastructure.
By the 1990s, rising health care spending was principally attributed by the public to new technology, suggesting a perpetual and widening gap between medical costs and general economic growth that could only be resolved at the national level by rationing beneficial care.Footnote 13 From this perspective, cost, access, and quality constituted the core attributes of a system in equipoise, and the only way to achieve more favorable performance along any one dimension was to sacrifice performance along another. Welfare economists would describe this situation as “Pareto optimal”; changes that might benefit one individual or group would harm somebody else.Footnote 14 Because it favors the status quo, Pareto optimality conveys nothing about moral superiority; Amartya Sen famously observed that a society “can be Pareto optimal and still be perfectly disgusting.”Footnote 15 As Lawrence Jacobs wrote at the time, the U.S. prioritized supply of new treatments, while European countries prioritized access to established ones.Footnote 16 Moreover, as physician-policymaker William Kissick observed, continued progress meant that no society over the long term could afford all the health care that its members would benefit from receiving.Footnote 17
Are we merely seeing the same picture thirty years later? Not really. The myth of optimal medical organization and decision-making has long been exploded. Inexplicable variation in cost from provider to provider and community to community, reflected neither in need nor outcome, made it clear that “best care at lower cost” was indeed a possibility. This was the conclusion in 2012 of the Institute (now National Academy) of Medicine, reinforcing its findings a decade earlier that the health care system it claimed to lead was beset by widespread medical error and a massive “quality chasm.”Footnote 18 These problems were magnified by persistent inattention to population-level causes and effects of ill health, which specialized physicians and acute-care hospitals had essentially declared “not their problem.”
A better system that could be built incrementally, without centralized rationing, has been promoted by a generation of health care reformers, led by the Institute for Healthcare Improvement (IHI). IHI’s “Triple Aim,” supported amply by research, asserted that the health care system should be able to simultaneously (i) improve technical quality and the personal experience of care, (2) improve population health, and (iii) reduce per capita costs.Footnote 19 Kissick’s pessimism was thus unwarranted, and the ACA’s sweeping ambitions in 2010 and beyond to improve health coverage, clinical care, and population health had acquired much stronger scientific and theoretical justification.
Unfortunately, efforts to pursue the Triple Aim were never robust — largely because of entrenched interest groups and limited incentives in U.S. health care’s faux marketplace — and did not result in breakthrough improvement. Supplanted by other frameworks and mantras, including those more directly focused on “health equity,” the Triple Aim no longer seems central to training either health professionals or policymakers.
“Accountable care organizations” (ACOs), the original darlings of the “value-based care” movement legislatively approved for Medicare in the ACA, are a case in point.Footnote 20 ACOs were designed to improve on managed care organizations (MCOs) by being physician-led, quality-driven, primary-care oriented, and risk-limited.Footnote 21 It turned out, however, that the requisite managerial and financial expertise resided mainly in hospitalsFootnote 22 – and they had little incentive to sacrifice high, assured fee-for-service earnings in exchange for a speculative, partial share of “savings” from care not provided. Where ACOs did thrive, it was often by becoming Medicare Advantage (MA) plans – assuming full risk but then hedging much of it by gaming the risk classification and quality reporting systems they had originally committed to honor.
What has happened instead? One way to put it is that the relationship between money and technical progress in health care became even further decoupled from the relationship between money and social solidarity.Footnote 23 A wealthy society, which we are, can devote resources to both technical achievement and collective welfare. Although money has continued to flow generously in the U.S. health care system, social divisions have intensified. As a result, innovation accelerated but became even less affordable, quality and safety failed to keep pace with innovation, access and equity stalled despite Obamacare’s insurance expansion, public health faltered, social solidarity weakened, and trust eroded. And “patients” quietly morphed from individuals to be comforted and cared for into diagnoses to be treated and charged for.
What has endured from the compromises generating the original Medicare legislation is a governmental health care system masquerading as a private one. The majority of the trillions of dollars dedicated to health care in any given year are public dollarsFootnote 24 and the core purpose of spending them is to benefit public health. Yet they flow almost entirely through private organizations, and the narrative that attaches to how they are spent comes no closer to solidarity than consumerism.Footnote 25
If the only certainty in life is change, change indeed happened–just not along predicted paths. Things that were relatively easy to change did so, but those pursuing profit found it simpler to exploit the existing, inefficient system than to force it into a semblance of efficiency that few would recognize and even fewer would appreciate.Footnote 26 As explained below, competition as a force promoting efficiency requires two basic attributes that U.S. health care lacks: real buyers and meaningful prices.Footnote 27 At the same time, pressure on the political process to resist significant reform was accentuated by pressure within the political process to undercut solidarity for partisan advantage. The sudden, seemingly impulsive dismantling of federal financial support for health, biomedical science, and medical care under the Trump administration represents a new high-water mark in this trend.
Where does the money keep coming from? Much represents taxpayer dollars being funneled through private organizations, with the slowness and intermittency of legislative change in the best of times combining with a history of professional control to perpetuate habit and favor innovation that can be financed through existing payment streams. Steady interest group pressure to maintain subsidies, plus occasional large-dollar bailouts justified as “stimulus” for economic downturns and the COVID-19 pandemic, are also contributing factors. Not infrequently, the political influence of these groups led legislators to cut into non-health spending — more of which was subject to annual appropriation — rather than challenge fiercely defended health care entitlements. Partisan posturing in Congress has replaced what might be a more thoughtful, deliberate budgeting process with multiple, short-term continuing resolutions hastily adopted under threat of default, along with suspensions/non-renewals of PAYGO rules. Until recently, low interest rates for government borrowing have reduced concern about large deficits and accumulating debt.
The same has been true for much private borrowing, especially pre-pandemic when low inflation and low unemployment managed to co-exist,Footnote 28 while tight labor markets in those years maintained the attractiveness of generous employer-based coverage for higher-wage workers. Even as provider prices rose under norms that favored broad networks over narrow networks, under-the-radar increases in consumer cost-sharing concealed what would otherwise have been visible as rising monthly premiums. Both the TPAs that administer health benefits for large, self-insured employers but do not themselves bear financial risk, and the pharmacy benefit managers (PBMs) that structure prescription drug formularies are deeply conflicted and seldom motivated to police spending. What little legislation has been enacted to assist them, such as the “No Surprises” Act to combat excessive, arbitrary billing by hospitals and out-of-network physicians, has been cumbersome and minimally effective.Footnote 29
This outcome does not speak well of the policymaking process, nor bode well for the American public. “Stein’s Law” – attributed to the Nixon administration economist Herbert Stein — says that if something cannot go on forever, then it will stop.Footnote 30 Health care spending continues to defy that expectation, even though a route by which access and affordability might converge still exists. The sledgehammer-like cost-cutting actions of the new Trump administration may be an exception that proves the rule, but have neither evident logic nor substantial consensus to support them.
This raises a possible paradox: would less money in the health care system at the outset of this period have meant more progress on key challenges over time? Perhaps. We will return to this intriguing question at the end.
II. Money-related Barriers to Reform
My early-career health policy immersion while staffing the Clinton Administration’s 1993 Task Force on National Health Reform was a wake-up call about the ways that money affects efforts to improve U.S. health care.Footnote 31 The Clinton plan’s failure highlighted an enduring aspect of health care policy: medical interest-group politics. In his prize-winning history of American medicine,Footnote 32 Paul Starr emphasized that corporate and government control were equally noxious to the organized, independent medical community, which justified its autonomy by citing the sanctity of the physician-patient relationship and had grown accustomed to dictating both treatment and billing with minimal attention to cost or pricing.Footnote 33
Rising health care spending — much of it the by-product of Medicare — accentuated these fears. Physicians’ earnings had increased substantially over the years, but what might have seemed like a windfall to older physicians was the status quo to their younger colleagues, who had incurred student debt and invested in building their practices with the expectation of high incomes.Footnote 34 By 1993, following a worrisome but brief economic downturn with attendant fiscal pressure on government, the rising cost of health care to American businesses, who sponsor coverage as a fringe benefit of employment, became as evident a threat to long-term affordability as the inflationary aspects of Medicare’s aging demographics. Unsurprisingly, “cost-containment” for either private coverage (through suddenly-evil “HMOs”) or public coverage (through cuts to “reimbursement”) provoked vocal opposition from medical associations.Footnote 35
As the Clinton reform proposal took shape, it raised physician hackles on both fronts simultaneously by relying for cost-control on competitive purchasing by employers from HMOs plus a “global budget” that capped annual national spending.Footnote 36 This approach, which survived the executive branch drafting process and remained the centerpiece of the bill primarily to gain fiscal palatability in Congress, made private health insurance businesses seem complicit with government rationing of care in the health reform enterprise, further worrying the medical profession and the public.Footnote 37
When Medicare was enacted in 1965, concern over rationing of beneficial care had been less salient from the public’s perspective than the hope that generous public funding would not only bring advanced health care to America’s seniors but also improve incentives to innovate, as exemplified by the special coverage added in the early 1970s for individuals of any age in need of kidney dialysis.Footnote 38 In terms of lobbying pressure, there were few medical interest groups at the federal level until there was Medicare funding to attract them. The most important adversary to convert in the Medicare debate was the American Medical Association, which strongly opposed “socialized medicine” on ideological grounds. Footnote 39 The most straightforward way to satisfy physicians was to promise them unconstrained clinical authority and self-determined fees, which President Lyndon Johnson did without hesitation.Footnote 40
The modern federal budgeting process and its associated political theater did not yet exist, leaving the fiscal debate only with round-number cost estimates. There was no federal Budget Control Act until 1974;Footnote 41 before then, nothing similar to the modern Congressional Budget Office (CBO) “scoring” process had to be navigated.Footnote 42 The Clinton reform was the first major health legislation to face (and be defeated by) specific fiscal-political barriers, while the Obama Administration’s successful navigation of the CBO was achieved only by design features that greatly increased the ACA’s vulnerability to litigation in federal court.Footnote 43
By 1994, the health care terrain had shifted along all three dimensions — rationing, fiscal constraint, and interest-group lobbying — rendering the Clinton reform plan unpassable. In a political climate that suddenly favored fiscal prudence, federal “scorekeeping” rules came to dominate assessments of the Clinton proposal, and the CBO was ultimately the Health Security Act’s reluctant executioner.Footnote 44 For their part, medical interest groups accustomed to generous government payment were more fearful than hopeful regarding massive legal change even if coverage expanded, while corporate America (which seemingly stood to benefit substantially from a truly national health insurance system) quickly learned that when push came to shove in the political process it would be left paying more rather than less.
Because America requires a can-do attitude from its leaders, President Clinton also explicitly instructed his bioethics advisors to avoid endorsing (or even mentioning) government rationing of care even though most of those experts believed that the prevailing system rationed it unethically based on ability to pay.Footnote 45 The Clinton proposal further signaled rejection of rationing by excluding the existing Medicare program from the rules that would apply elsewhere, even though wasteful care at the end of life was a common explanation at the time for relentlessly rising medical spending (to be replaced a few years later by overuse of high-priced emergency departments). Neither assurance persuaded the public, most of whom were afraid of losing existing benefits more than they were eager to universalize coverage.Footnote 46
In fact, the Clinton plan’s architects had vacillated between two views of health care reform, one that likely would have required either rationing care or imposing higher taxes to expand insurance coverage, and a second that invoked theoretically attractive but unproven market forces. The first, an established option since the 1930s typically called “single payer,” appealed ideologically to Democratic politicians and their allies in organized labor and left-leaning coastal cities, as well as bureaucratically to federal regulators who were used to administering Medicare as a gigantic, if not exclusive, funder of hospital and physician care paid on a fee-for-service basis.Footnote 47 The second was newly formulated by academic economists under the moniker “managed competition,” and was wholly untested if half-way established in a few parts of the country (e.g., the Kaiser health system in California).Footnote 48 Managed competition sought to organize both the purchasing of health insurance and the provision of covered medical services into two sets of large, geographically based organizations — the former quasi-monopsonies and the latter competing enterprises — rendering government unnecessary as a payer and casting HMOs (soon to be called “managed care organizations” or the more innocuous-sounding “health plans”) as the central actors in both managing risk and arranging accessible, high-quality care for their insured populations.
Neither view, it should be said, was particularly palatable to physicians or their professional organizations. The former would have been explicitly public, rather than having public dollars generously subsidize private actors. The latter would have been explicitly corporate, without the primacy of the individual physician-patient dyad and its familiar ethical obligations. A single-payer would, in physicians’ opinions, “socialize” medicine in the United States as it had throughout Western Europe, reducing their independence and income.Footnote 49 But the latter seemed truly horrific, shifting patient allegiances from them to the HMO, thus creating an adversarial relationship between physicians and HMOs over the necessity of care, and making profit the principal motivator for the shift in control.
Under political pressure to find a centrist solution, the Clinton Administration split the difference. Its 1993 proposal preserved Medicare in its existing fee-for-service form, imposed a coverage mandate on employers, who would purchase HMO-style, largely through new, regional non-profit “alliances,” and subjected the entire “system” to a global budget that Congress would monitor and, if need be, enforce.Footnote 50 In truth, the primary motivator of this was not so much political pragmatism as fiscal politicsFootnote 51–the hope that the CBO would not regard money paid by private employers to private alliances as a new federal tax (it did, killing the planFootnote 52), and that placing an explicit cost cap (which a later Congress could still choose to amend or ignore) into the health reform law would put an upper bound on the overall ten-year budgetary impact notwithstanding the uncertainty of predicting private market outcomes.
An important if inadvertent effect of this design was to accelerate cost growth in health care during the late 1990s and early 2000s. A national political backlash occurred against “managed care” that was not offset by concerns over loss of employment-based health insurance because overall economic conditions remained favorable.Footnote 53 That backlash began with partisan opposition to the Clinton plan, which seized on public fears of rationing to cast health alliances as government bureaucrats that would deny Americans their choice of insurance plan and therefore of physicians.Footnote 54 In fact, “managed competition” was not “managed care,” and had been intended to assure affordability and quality in a national insurance system and not merely to empower managed care plans. Opposition interests made sure that difference was lost on the public.
When the Clinton plan failed, unregulated managed care took hold, albeit briefly–reviewing the necessity of treatments, overseeing hospital length of stay, signing up physicians and hospitals for “preferred” networks, and bargaining fees downward.Footnote 55 Within five years, however, reactive legislation at the state and eventually the federal level de-fanged managed care by restricting what is now called pre-authorization, thereby discouraging narrow provider networks, and prohibiting financial incentives to limit treatment. At the same time, hospitals consolidated into larger systems that could bargain for higher reimbursement (as did many physician groups).Footnote 56 When mergers that significantly reduced hospital competition in their communities were challenged by federal antitrust regulators, the merging organizations prevailed in seven straight cases between 1994 and 2000,Footnote 57 confirming a narrative that cast physicians and hospitals as altruistic and HMOs as profiteering villains who were sacrificing quality and access by denying needed care. This legal, political, and perceptual dynamic set the stage for the spending increases that followed. At the same time, no serious case was being made after the Clinton plan’s demise for health care as a collective investment in the public’s health or as a valued aspect of shared American identity.
III. Missed Opportunities and Perhaps Getting Worse
The late 1990s and 2000s were not devoid of national efforts to rationalize health care spending while promoting affordability and expanding access. Among many developments: the Health Insurance Portability and Accountability Act of 1996 made small-group insurance markets more available; Medicare added an outpatient prescription drug benefitFootnote 58; support for Federally Qualified Health Centers grewFootnote 59; health information technology proliferated; and advances occurred in drug development, quality measurement, and patient safety processes. There were even periods of apparent moderation in the growth of health care spending, especially during and immediately following the “Great Recession” of 2007-08.Footnote 60 But it was only in the aftermath of that economic crisis that — as had happened a generation earlier — returning a Democrat to the White House brought national health reform once more to the top of the national policy agenda.Footnote 61
By the time President Obama’s Affordable Care Act took shape, a lot had been learned about the sources of both inefficiency and unfairness in U.S. health care, even if the health equity movement with its deeper understanding of structural racism and consequent injustice was still nascent. The potential for much greater clinical cost-effectiveness had been demonstrated by Triple Aim advocates,Footnote 62 the importance of upstream “social determinants” (now often called “non-medical drivers”) of health had been established,Footnote 63 and professional practice restrictions and payment policies that compromised access and increased cost were being reconsidered.Footnote 64 At the same time, new generations of caregivers and recipients of care were poised to do things differently, with greater patient-centeredness, better communication, more level professional hierarchies, and larger, more team-based organizations.
Partly by design and partly by circumstance, the ACA took advantage of these advances in expert understanding of health system performance. Ambitiously, it enacted major changes to federal law in three distinct though related domains: health insurance (to render all Americans insurable at affordable premiums or under public programs), health care services (by enhancing value), and underlying health (by investing in preventive services and community well-being).Footnote 65 The first of these was the easiest to achieve: everyone is insurable if everyone is covered, and affordability of insurance (at least in the short term) simply requires financial subsidy through, in the ACA’s case, tax credits and an expanded Medicaid program. Streamlining health care delivery and improving individual and community health are much harder goals to accomplish, and the measures contained in the ACA were more tentative.
The ACA had skirted past the three shoals on which the Clinton plan foundered,Footnote 66 but the political navigation necessary to do so took its toll. Fiscal-political blowback from the CBO scorekeeping process was partly avoided by pre-funding aspects of health reform in the HITECH Act and other Great Recession stimulus legislation, then bolstered by limiting scorable mandates to the small subset of individual health insurance policies (leaving more numerous employer-sponsored group plans largely untouched), and budgetary gamesmanship such as favoring lower-priced Medicaid coverage over tax-subsidized private insurance. Footnote 67
This approach avoided a politically unacceptable CBO budget score, but placing obligations on states or private parties that would have otherwise been borne by the federal government conferred standing to sue on many of the ACA’s opponents, which they did with enthusiasm and persistence. Nearly all the high-profile lawsuits focused on the insurance piece – the “individual mandate” to have coverage; the expansion of Medicaid to cover all poor Americans regardless of age, gender, disability, or family status; and the inclusion of contraceptive benefits as covered preventive care.Footnote 68 The core of the insurance reforms survived multiple trips to the Supreme CourtFootnote 69 as well as several election cycles, but distracted policymakers’ attention from improving health care delivery and community health, which further explains why costs continued to rise and solidarity faltered.
The Clinton plan’s refusal to acknowledge any ethical case in favor of rationing also came back to haunt the Obama administration when it was accused without evidence of wanting to create “death panels” to deny medical care to Medicare beneficiaries.Footnote 70 A harbinger of conspiracy theories to come (and ironic given later conservative commentary describing high COVID-19 deaths in the elderly as acceptableFootnote 71), death panel rhetoric led the ACA’s proponents to avoid using centralized data or expert analysis to determine covered benefits or provider payment.Footnote 72 The ACA’s new Patient-Centered Outcomes Research Institute (PCORI) was explicitly prohibited from playing a role in defining cost-effective coverage,Footnote 73 and its Independent Payment Advisory Board was never even constituted.Footnote 74 Perhaps most importantly, the need to deny a “government takeover” of medical care prevented the Obama administration from making health reform via the ACA into a truly collective project.Footnote 75
Finally, interest-group politics cautioned against radically restructuring health care. Opposition from health care industry groups fearing loss of revenue was blunted by the absence of named villains in the Obama administration’s framing. To the contrary, key constituencies were courted with assurances of new paying customers, including health insurers (which had opposed the Clinton plan because it would have forced them to alter their core business model), hospitals, pharmaceutical companies, and physicians. Nor did most large corporate employers find the ACA objectionable, as it left nearly all their existing health benefit practices in place.
The ACA has largely been successful in its central goal of increasing the percentage of Americans with health coverage,Footnote 76 with the consensus need for pandemic-related tax subsidies and entitlement extensions helping counterbalance erosion of the mandates and benefits in Congress and the courts. Nonetheless, the post-ACA period arguably has taken us farther from — not brought us closer to — a more effective and fairer health care system.
Overall, there have been few economic counter-pressures to continued health system underperformance with limited access yet persistent medical inflation, and few political ones either. To the contrary, the angry “othering” that has grown to dominate partisan rhetoric is inconsistent with a better, less costly health care system. The remainder of this section highlights some worrisome trends that have tended to undercut both health system stewardship of what are largely public resources and health system solidarity regarding us all being “in this together.” Significantly, “business interests” account for few if any of these trends, apart from the profit potential that inheres in continuing the current healthcare system rather than moving toward a more effective, accessible one.
IV. VALUE/PERFORMANCE
While many constituencies continue to support the idea of private rather than government-controlled health care, few applaud the overall performance of the U.S. health care systemFootnote 77 This is mainly because the system’s background conditions have changed little since Medicare was enacted.Footnote 78 These include massive amounts of public money for primarily public purposes “laundered” through private provider organizations and coverage intermediaries,Footnote 79 political entrenchment of these financial flows,Footnote 80 and professional control over clinical decisions and associated billing that disaggregates medical services and emphasizes revenue over cost in establishing production functions.Footnote 81
Consequently, U.S. health care has the semblance of a market, but little of a market’s responsiveness to change. This was poignantly illustrated during the COVID-19 pandemic, when the sudden inability to deliver lucrative in-person, elective procedures “reimbursed” by private insurance intermediaries sent health care organizations into a financial tailspin requiring government bailout.Footnote 82 Instead, the pattern of health care operations remains that when dedicated subsidies for new ideas end, so does the related practice innovation. While catchphrases may abound — from “patient safety” to “patient-centered care” to “value-based care,” each with associated metrics — sustained progress is rare.
A. Competition?
Health law and policy scholars are probably more likely today than at any time in the last thirty years to believe that market competition has failed as a path to health system improvement.Footnote 83 A more accurate characterization is that market competition never had a chance to succeed. Efficient production and allocation depend on prices conveying information, and there are few economically “real” prices in the health care system.Footnote 84 It is equally difficult for markets to function without actual buyers, and most significant health care purchasers are using OPM (“other people’s money”), whether private employers, administrators of self-funded employer plans, or government health programs.Footnote 85 What one typically calls an “insurer” is seldom bearing insurance risk, but rather taking a percentage of the revenues flowing through the system. What one might draw as a “supply chain” for pharmaceuticals is more circular than linear, with money being poured in from outside, circulating in multiple pathways and directions among manufacturers, PBMs, and pharmacies, and eventually resulting in the transfer of a product to a patient. Moreover, most transactions are based on reimbursable claims for professional process steps dictated by physician specialists, plus disorganized inputs into those professional process steps.Footnote 86 For much of the health care system, this turns “patients” from living beings with physical and emotional needs into financial fictions to which billing codes can be attached. Nothing has changed this in recent years; to the contrary, pandemic-generated financial distress followed by financial relief from government has only reinforced these dynamics. Whether construed as “volume” or as “value,” the core challenge for health care markets is to pay for meaningful products and services that are produced at the lowest cost and sold at a competitive price.Footnote 87
B. Consolidation
Private equity roll-ups of physician practices and other organizations are only the most recent sector of the health care system to consolidate. Some consolidation, like home health care during the 1980s,Footnote 88 has been the result of new Medicare funding streams creating easy profits for start-up businesses, many of which merge (or fail) when financial opportunism causes payment rules to change. Other consolidation, such as among hospitals, health insurers, and physician practices during 1990s-style managed care,Footnote 89 happened in anticipation of greater market discipline – either to become market leaders or to defend against competitive threats.
The political backlash against managed care weakened antitrust enforcement involving hospital mergers while simultaneously reducing, through enhanced regulation, the incentives on the insurer and employer sides to demand cost reductions.Footnote 90 Consolidation therefore accelerated into the 2000s, with demonstrable harm to price competition and plausible harm to process improvement,Footnote 91 in part because U.S. antitrust law is better equipped to forestall potentially anticompetitive consolidation than to address its aftermath.Footnote 92 Nor has productivity measurably improved. Even consolidated health care provider markets remained operationally fragmented because of the enduring regulatory and payment partition between licensed physicians and the facilities in which they deliver professional services.Footnote 93 This reinforces the point that the regulatory environment of health care often enhances the anticompetitive potential of private business structures and conduct.Footnote 94
C. Physicians and Nurses as Employees
As a result of consolidation, generational change, and to a lesser degree, recent financialization (e.g., private equity investment), hospitals and other health care organizations now and for the first time, have a majority of their clinical workforce (physicians, nurses, and other health professionals) serving as employees rather than as practice owners or independent contractors.Footnote 95 This convergence toward teamwork and shared goals has potentially positive implications for patient safety, health equity, professional ethics, and health care payment and regulation. Yet the common meaning of “employer” in health policy discourse remains “payer” in the sense of non-health care businesses that sponsor coverage for their workers. Trends toward an employment model for physicians tend to provoke knee-jerk criticism rather than thoughtful consideration of how hospitals and other healthcare organizations can be held to high standards for assuring their workers’ well-being and therefore the quality of their services.Footnote 96
Beyond professional nostalgia and consequent inattention to generational change, a major reason for this blind spot is that both physicians and nurses are essentially invisible on even the largest hospital bills. The reasons are opposite: physicians’ services are billed separately under professional rather than facility codes,Footnote 97 even when they are hospital employees, while skilled nurses are essentially treated as furniture, meaning that they are accounted for as hourly rather than salaried labor cost that is folded into the overhead associated with a “hospital bed.”Footnote 98 As a result, hospitals may not take their responsibilities as employers seriously, and neither government nor the broader public has the context to demand it.
D. Post-pandemic Backsliding
Such is the strength of self-protective regulation affecting the American medical profession that greater efficiency-enhancing liberalization arguably occurred in the first year of the COVID-19 pandemic than in the half century preceding it.Footnote 99 Restrictive state-by-state licensing and the narrow scope of permitted practice for non-physician clinicians, for example, have been criticized for decades by experts of all political persuasions for raising costs, reducing access to care, and limiting educational opportunity.Footnote 100 These barriers — including lack of payment parity — fell quickly during the pandemic as disease surges and local staff shortages could only be remedied by interstate mobility of nurses and other skilled personnel, and telehealth services replaced in-person visits for non-emergency treatment.Footnote 101 Unfortunately, although predictably, the post-pandemic period has brought significant backsliding, not only because emergency authorizations at both state and federal levels lapsed, but also because it is more lucrative for many provider organizations to return to old workflow patterns and their associated billing privileges. This process has been accompanied by a resurgence of protectionist physician advocacy opposing the restoration or expansion of practice authority for advanced practice nurses and others,Footnote 102 which seems to be part of a pattern of physicians “fighting the last war” despite its inconsistency with any forward-looking approach to ethical, cost-effective, and accessible interprofessional practice.
E. Drug Costs and Innovation Funding
Sharp increases in drug prices — understandable to some degree for cutting-edge biologics but seemingly inexcusable for small molecules that have long been on the market — also illustrate the limits of market competition. Regulatory responses, probably long overdue but still of unproven effectiveness, include federal caps on diabetes patients’ monthly expenditures for insulin paid through government programsFootnote 103 and a new system of selective price negotiation between drugmakers and government for a rotating list of patented drugs that impose a substantial cost on Medicare.Footnote 104 These limited measures reflect tunnel vision regarding both the underlying problem and the range of potential solutions.Footnote 105 The problem is seen as an unresolvable tension between the billions of dollars needed to develop a new drug and bring it to market, and the pennies it costs to produce each additional pill once available.Footnote 106 The solution is framed as a Goldilocks determination of what price paid per unit at the point of service to a patient is “just right” given the aforementioned tension. These approaches seem incompatible with a market framework, but radical alternatives have yet to emerge even in the aftermath of the COVID-19 pandemic. Instead, efforts to reduce spending have rekindled old animosities (and their typically non-innovative political manifestations) between physicians and insurers over “pre-authorization” and similar administrative burdens on professionals’ clinical judgment.Footnote 107
V. EQUITY/SOLIDARITY
If the 1980s and 1990s were an era when business pressures from international competition, rising health benefit costs, and the awakening of “market forces” were in apparent tension with national health solidarity, the last thirty years have undercut solidarity through partisan divisions centered on regional geography, culture, and allegiances. During this shift, commercial interests were joined and sometimes superseded by partisan or ideological ones. For example, the dynamics of state-local conflicts over health-promoting city or county ordinances (“preemption”) shifted from state-level influence by large corporations (e.g., sugar-sweetened beverage manufacturers or fast food restaurants) to political contests pitting liberal, urban areas against conservative, rural ones.Footnote 108 Similarly, consensus following the September 11, 2001 terrorist attacks regarding investment in bio-preparedness and biomedical research generally, and similar consensus during the Great Recession regarding investment in health information technology, reflected a potential for health solidarity that seems to have dissipated shortly after the COVID-19 pandemic, regardless of generous federal subsidies for testing, treatment, and vaccine development.
Disagreements around authority, professional judgment, expertise, and information generally lie at the heart of this shift, which political opportunism both magnifies and exploits. Skepticism regarding elite opinion and conspiratorial thinking has a long history in American society, but the intensity of division today seems unique.Footnote 109 Optimizing information exchange has always been challenging in health care, between the public’s uneasy reliance on physicians’ professional judgment, its suspicion of both government and corporate interference, and the inescapable fact that billing and payment rather than quality or safety or health improvement dominate the medical information ecosystem. These tensions have been compounded in recent years by technologic advances in data and communication that have outpaced efforts to monitor them, with massive threats to privacy and cybersecurity, an abundance of misinformation and disinformation, and now the uncertainties associated with generative AI. Shifting First Amendment doctrine has also played a role, with the Supreme Court now routinely extending full constitutional protection to commercial as well as political speech, and bootstrapping free speech rights onto equally expansive decisions protecting religious free exercise.Footnote 110 The COVID-19 pandemic supercharged many of these risks, aligning the political, commercial, technical, and legal environments to favor misinformation, and subjecting infection-related guidance to conspiratorial thinking and even violence. The new Trump administration has further amplified this informational dysfunction and has given it the imprimatur of federal policy.
A. “Medicalization”
Recent insights regarding racial and ethnic health disparities and the importance of social (i.e., non-medical) drivers of health could be solidarity-enhancing if the public and the political process were to recognize that investments outside of the conventional medical system often provide cheaper, broader payoffs than investments within it.Footnote 111 However, because the health care workforce is so large and the financial flows that support it so generous (and so dependent on organized medical interest groups and their lobbyists), the path of least resistance has often been to “medicalize” health-related social problems by bringing housing, nutrition, and other non-medical drivers inside the medical tent rather than diversifying society’s investment in health. Although well-intentioned, many of these efforts have subjected health-enhancing but non-medical domains to the corporate, insurance claims-driven, professionally hierarchical limitations of hospitals and their payers rather than being deferential to, and financially supportive of, established community organizations.Footnote 112 Scholars therefore divide on the desirability of medicalization.Footnote 113 More generally, medicalizing social problems tends to reinforce dependency by applying a “patient” construct, as opposed to empowering recipients by providing a targeted financial subsidy or, as economists typically prefer, cash.Footnote 114
B. Racism and the “Undeserving Poor”
When the ACA expanded the Medicaid program to include essentially all poor Americans on a national basis, its straightforward goal was to reduce the ranks of the uninsured and relieve financial pressure on the hospitals that serve them, often in neighborhoods where poverty is concentrated and privately-insured patients are relatively scarce.Footnote 115 For reasons of fiscal politics and an in-retrospect naïve desire to preserve states’ autonomy, however, that reduction was to be accomplished through state-by-state cooperation with generous but not complete federal payment, which gave states legal standing to bring suit against the expansion and quickly led the Supreme Court to prohibit, as unconstitutionally coercive, any withholding of existing Medicaid funds from states that declined to expand the program.Footnote 116
As liberal states (and many health care philanthropies) embraced health equity, conservative states mobilized against Medicaid expansion as a liberal command to erase a long-standing distinction between aiding those whose need was no fault of their own — the old-fashioned term is the “deserving poor” — and encouraging shirking and risky behavior among seemingly less deserving groups. Arguing that reducing “dependence” was a legitimate goal of Medicaid, conservative states added work requirements and similar measures to their waiver requests and then swiftly moved to disenroll beneficiaries who had remained eligible for Medicaid under pandemic-related emergency authorities.Footnote 117 Racism has probably played a significant role in changing the Medicaid expansion from an expression of solidarity into a social flashpoint. According to surveys, whether a state has expanded Medicaid correlates strongly with the perception, particularly by white residents of that state, of Medicaid as insurance rather than welfare for the “undeserving.”Footnote 118
C. Abortion and Reproductive Health
During the 1993-94 health reform debate, abortion rights advocates coined the phrase “medically appropriate” to position abortion for government coverage within general categories of medical benefits, rather than listing it separately in proposed legislation where it could be easily targeted for elimination by amendment. A similar maneuver in the ACA brought contraception into the category of preventive services that would be covered without cost to the beneficiary, including in employer-based health plans.Footnote 119 The reaction from conservatives was swift, with the provision generating litigation that was heard on multiple occasions all the way to the Supreme Court, again sacrificing national uniformity to the “culture wars.”Footnote 120
These divisions have only gotten worse after Roe v. Wade was overruled by Dobbs v. Jackson,Footnote 121 magnifying hostility among states and challenging even the limited solidarity in U.S. health care created by the federal EMTALA statute for hospital-based emergency care without regard for immigration or insurance status.Footnote 122 Similar divisions have been stoked by state legislation restricting transgender health care, resurrecting a long-standing argument among conservatives that expansive federal policies on issues of sexual and gender identity are intended to alienate children from their parents’ traditional valuesFootnote 123 (notwithstanding that many policies on the political right allow government to dictate private family matters and impose majority religious views on non-conforming individuals).
D. Public Health Prevention and Emergency Response
Public health interventions were exacerbating partisan divisions in the American public well before the COVID-19 pandemic. The ACA had created a federal Prevention and Public Health Fund with projected annual funding of $2 billion, a minuscule fraction of federal Medicare and Medicaid expenditures but a substantial sum in historical terms.Footnote 124 These resources were intended to support individual and population health, concentrating on underserved communities and chronic diseases such as obesity-related diabetes that were primarily addressed through behavioral change. Republican opposition to the ACA therefore incorporated objections to what some called the “nanny state” policing nutrition and physical activity not to protect third parties but to protect individuals from themselves (or, as above, to intrude on families).Footnote 125
Somewhat surprisingly, this worsened when COVID-19 struck, despite serious communicable disease long constituting an acceptable justification for proportionately constraining civil liberties,Footnote 126 even among libertarian-leaning conservatives. Social distancing, school closures, masking, limitations on gatherings, workplace restrictions and, eventually, vaccination — many imposed despite unavoidable scientific uncertainty regarding a novel pathogen — all became embroiled in partisanship and sectionalism. Related strands of political tribalism; mistrust of expertise (some well-founded); and social media amplification of misinformation, disinformation, and conspiracy theories are also likely responsible. At the extreme, Trump-aligned Republicans have turned the conventional libertarian distinction between communicable and non-communicable diseases as a justification for public health intervention on its head – asserting that public health is overly focused on infections and should instead “make America healthy again” by targeting chronic conditions.
E. Addiction, Guns, and Mental Health
Rising income and wealth inequality since the 1990s took a toll on poor communities regardless of race, especially in parts of the country, such as Appalachia and its surroundings, where manufacturing and mining jobs had vanished and where few other opportunities for training or employment existed.Footnote 127 Increases in addiction-associated harms, mental illness, domestic violence, and the proliferation of guns led to rapid increases in suicide, overdoses, and other so-called “deaths of despair.”Footnote 128 Prescription opioids and later heroin and fentanyl were particularly pernicious,Footnote 129 in part because an opioid prescription was for many years the best way to access monetary benefits for musculoskeletal disability after welfare reform made cash assistance less available.Footnote 130 Nor was it lost on the most affected communities that physicians and other so-called “pain experts” had been conned, at best, and more likely complicit in industry schemes to market opioids — and opioid-mediated death — on an unprecedented scale.Footnote 131 Trust, which had always been fragile, evaporated. Combined with persistent underinvestment in effective care for mental illness and substance use disorders, regional divisions and associated culture wars in legislatures and the courts over gun restrictions made any “coming together” over health impossible, especially at the national level.
VI. CONCLUSION
This essay seeks neither to bury nor to praise the U.S. health care system. Certainly, there have been many successes over the last thirty years, including near-miraculous advances in both diagnostics and therapeutics. From a policy perspective, low-cost generic drugs treat most ailments.Footnote 132 Federally qualified health centers provide outstanding care to diverse communities, often in conjunction with social services.Footnote 133 Smoking has declined dramatically,Footnote 134 although other substance use disorders and mental health have not improved.Footnote 135 Outpatient or short-stay procedures are common and generally safe. Medical imaging, image processing, and information exchange are much faster and more effective. Biologics and small-molecule drugs can be developed or screened with speed and precision. Gene therapies are becoming a reality. And the health care workforce is skilled, caring, and reliable.
Still, as discussed above, potentially beneficial technological, organizational, and social progress has been delayed or compromised because the United States continues to construe health care as an individual service rather than a shared resource. Our longstanding culture of physician professional control is reflected in law and in payment policy, and the federal funding streams that support it are hard to modify. The ACA made major improvements to health insurance, if we can keep them, but in terms of overall quality both the health care system’s efficiency and its equity have languished or backslid since the ACA’s enactment. The pandemic experience was revealing, but its lessons elude us.Footnote 136
Which brings us back to the question of money. How many editorials in both medical journals and the popular press have bemoaned the role of money in medicine? How many have criticized financial relationships between physicians and the pharmaceutical industry? Between hospitals, insurance companies, and drug companies and their investors? How many have asserted conflicts of interest, or called out fraud, or lamented greed? And what, really, has changed?
We should resist adding private equity — or whatever might follow it — to our list of existential threats. Private equity might be seriously disruptive, for ill or perhaps for good. At scale, it might remove rather than recycle capital from the health care system, which is problematic because substantial amounts of what is largely public money should be recaptured for other public purposes rather than being siphoned off by private interests. It might finally focus attention on cost and the production function in health care delivery, in addition to enhancing potential revenue. It might even take its role as employer of health professionals seriously, or be forced to do so, thereby articulating a stronger managerial ethic with a more coherent approach to conflicts of interest or obligation. But likely it will adapt, like many potential pathogens, to a less virulent form that feeds off the current system rather than destroying it, with continued medicalization of social problems and with compromise approaches to governance resembling today’s nonprofit but still profitable hospital sector.
But what if Medicare had not written essentially a blank check for medical care? Would things be worse, or might they be better? Is the quality of our health care system constrained only by the limits of our bank accounts? Or is quality constrained because our bank accounts have not been limited?
With so much money flowing to them, we seldom pause to ask “what is” questions about the most basic actors in the health care sector. What is a hospital? A health insurer? A service? Even a patient? We are comfortable with trendy phrases such as “patient safety”, “value-based care”, and “health equity.” We are equally comfortable assigning blame, especially to corporate actors who seem peripheral to actual care delivery. But we are less sure of the principles and ethics that define the system we want.Footnote 137
In my view, the most urgent lessons from COVID-19 are about defining the collective investment and performance that the American public must demand of its health care system. This urgency is compounded in the present moment by the Trump administration’s rapid, wholesale cancellation of contracts and grants for science and education involving medicine and public health, its appropriation of personal and health-related information, its retaliation against state and local governments with which it disagrees, and its alteration of regulations and withholding of additional federal funding without following established legal process. Considering the seeming unwillingness of Congress to assert its constitutional and institutional prerogatives, a substantial reduction in government commitments to Medicaid and perhaps even Medicare seems likely, although there has been little explanation of the purpose of doing so or seeming awareness of its potential adverse effects.
All of this Executive-branch activity has rapidly revealed to many who were unaware of it the U.S. health care system’s dependence on public funding – a degree of invisibility that itself makes it harder to mobilize public opinion in its defense than would be the case for an explicitly governmental health care system such as England’s National Health Service (NHS) or even a formalized system of publicly structured, employment-based coverage that exists in many developed countries. Nor is there sufficient managerial capacity or flexibility within America’s private health care sector to quickly and effectively adjust to the rapid withdrawal of public funding.
For the next few years of health policy, what might we focus on more than money? How about the people who provide care: ethics, opportunity, training, and fair pay for meaningful work? And the people who receive care, and who are ultimately most concerned with, and most responsible for, their health? Physicians still possess considerable public authority and economic influence; nurses enjoy unparalleled community trust. These reputational assets must be strategically deployed in defense of science, compassion, and community before they fall victim to the current political moment.
Health professions also represent the future. We tend to imagine professional archetypes with deep historical roots and assign them fixed preferences, especially when their organized representatives are lobbying for or against legislation. But professionals are merely people, and those people learn, leave, retire, and are followed by others. The challenges of post-ACA medical practice are more tractable and less ethically jarring for younger generations of health professionals than for older ones because of who they are, how they are trained, and what they believe about the goals and consequences of the tasks they are undertaking. As discussed above, practice structure has changed as well: a substantial majority of physicians are now employees rather than business owners or partners.Footnote 138
Changes in physician professionalism accompany parallel changes among recipients of care. If one imagines an educated, insured patient thirty years ago diagramming her care, it is likely she would place her family’s physician at the center. Such a diagram today would be much more likely to place the patient herself at the center, armed with a smartphone while connected to a host of health-related products, services, support groups, and professionals. These technology-driven trends in reconfiguring the patient role are likely to accelerate because of generative AI.
Empowerment will not be evenly distributed among care recipients, however, imposing additional challenges on those who are chronically ill, poor, homeless, unemployed, or who live in underserved communities. Widening income inequality and intensifying racial discrimination loom if the social safety net frays in the next few years and threatens to reduce resilience among care recipients even as generational change promises to increase it among care providers.
The greatest challenge is to convince Americans, and ideally America’s political leaders, that solidarity around health and health care is neither “socialized medicine” nor a commercial scam. In the United States, change will only happen when, echoing what Dr. Kassirer observed more than twenty years ago, the American health professions clearly proclaim that “[a] system in which there is no equity is, in fact, already unethical.”Footnote 139 In particular, the United States has empowered physicians to oversee its health care system in an ethical fashion. Therefore, physicians must work shoulder-to-shoulder with other professions to defend health solidarity today, and must attach ethical primacy to improving it tomorrow. That, to me, seems the best way forward.
